The Effect of Pollution on Worker Productivity: Evidence from Call-Center Workers in China

We investigate the effect of pollution on worker productivity in the service sector by focusing on two call centers in China. Using precise measures of each worker’s daily output linked to daily measures of pollution and meteorology, we find that higher levels of air pollution decrease worker productivity by reducing the number of calls that workers complete each day. These results manifest themselves at commonly found levels of pollution in major cities throughout the developing and developed world, suggesting that these types of effects are likely to apply broadly. To our knowledge, this is the first study to demonstrate that the negative impacts of pollution on productivity extend beyond physically demanding tasks to indoor, white-collar work.

Something in the Air: Pollution and the Demand for Health Insurance

Using data on insurance contracts from a large insurance company, we find that daily air pollution levels have a significant effect on the decision to purchase or cancel health insurance in a manner inconsistent with rational choice theory. A one standard deviation increase in daily air pollution leads to a 7.2% increase in the number of insurance contracts sold that day. Conditional on purchase, a one standard deviation decrease in air pollution during the cooling-off (i.e., cost-free cancellation) period relative to the order-date level increases the return probability by 4.0%. We explore a range of potential mechanism and find the most support for projection bias and salience.

Going to Pot? Medical Marijuana Dispensaries and Crime

Many jurisdictions that sanction medical or, more recently, recreational marijuana use allow retail sales at dispensaries. Dispensaries are controversial as many consider them crime magnets. To assess this claim, we analyze the short-term mass closing of hundreds of medical marijuana dispensaries in Los Angeles. Contrary to conventional wisdom, crime increases around dispensaries ordered to close relative to those allowed to remain open. The increase is specific to crimes most plausibly deterred by bystanders, and is correlated with neighborhood walkability. A similar pattern of results is found for temporary restaurant closures. These findings provide some of the first credible evidence that “eyes upon the street” deter crime.

Physician Agency and Patient Survival

We investigate the role of physician agency in determining health care supply and patient outcomes. A 2005 change to Medicare fees had a large, negative impact on physician profit margins for providing chemotherapy treatment. In response to these cuts, physicians increased their provision of chemotherapy and changed the mix of chemotherapy drugs they administered. We find that this change improved patient survival, extending median life expectancy for lung cancer patients by about 18%. In addition while physician response was larger in less concentrated markets, survival improvements were larger in more concentrated markets.

Being Surprised by the Unsurprising: Earnings Seasonality and Stock Returns

We present evidence consistent with markets failing to properly price information in seasonal earnings patterns. Firms whose earnings are historically larger in one quarter of the year (“positive seasonality quarters”) have higher returns when those earnings are usually announced. Analyst have more positive forecast errors in positive seasonality quarters, consistent with the returns being driven by mistaken earnings estimates. We show that investors appear to overweight recent lower earnings following a positive seasonality quarter, leading to pessimistic forecasts in the subsequent positive seasonality quarter. The returns are not explained by announcement risk, firm-specific information, increased volume, or idiosyncratic volatility.

Looking for Someone to Blame: Cognitive Dissonance and the Disposition Effect

We analyze brokerage data and an experiment to test a cognitive dissonance based theory of trading: investors avoid realizing losses because they dislike admitting that past purchases were mistakes, but delegation reverses this effect by allowing the investor to blame the manager instead. Using individual trading data, we show that the disposition effect -- the propensity to realize past gains more than past losses -- applies only to nondelegated assets like individual stocks; delegated assets, like mutual funds, exhibit a robust reverse-disposition effect. In an experiment, we show increasing investors' cognitive dissonance results in both a larger disposition effect in stocks and a larger reverse-disposition effect in funds. Additionally, increasing the salience of delegation increases the reverse-disposition effect in funds. Cognitive dissonance provides a unified explanation for apparently contradictory investor behavior across asset classes and has implications for personal investment decisions, mutual fund management, and intermediation.

Particulate Pollution and the Productivity of Pear Packers

We study the effect of outdoor air pollution on the productivity of indoor workers at a pear-packing factory. We focus on fine particulate matter (PM2.5), a harmful pollutant that easily penetrates indoor settings. We find that an increase in PM2.5 outdoors leads to a statistically and economically significant decrease in packing speeds inside the factory, with effects arising at levels well below current air quality standards. In contrast, we find little effect of PM2.5on hours worked or the decision to work, and little effect of pollutants that do not travel indoors, such as ozone. This effect of outdoor pollution on the productivity of indoor workers suggests a thus far overlooked consequence of pollution. Back-of-the-envelope calculations suggest that nationwide reductions in PM2.5from 1999 to 2008 generated $19.5 billion in labor cost savings, which is roughly one-third of the total welfare benefits associated with this change.

Judge Specific Difference in Chapter 11 and Firm Outcomes

Using the random assignment of Chapter 11 filings to bankruptcy judges within a district court, we show that bankruptcy judges vary systematically in the creditor or debtor-friendliness of their rulings. Surprisingly, firms assigned to debtor-friendly judges have worse continuation outcomes: they have lower rates of survival, sales and employment growth in the five years after filing. These results are not driven by selective termination in Chapter 11, but seem to be the result of increased misalignment in incentives between managers and shareholders in distress and the ability of managers to extract private benefits from the firm.

Despite a large literature and considerable policy interest, debate remains over the motives of nonprofit hospitals. We test four leading theories of nonprofit behavior by studying the response of California hospitals to a large, plausibly exogenous fixed cost shock generated by an unfunded seismic retrofit mandate. We show that seismic risk is uncorrelated with a host of hospital and neighborhood characteristics but predicts increased shut down. Higher seismic risk is also associated with increases in the provision of a range of profitable services by nonprofits, but uncorrelated with the provision of charitable care. These results allow us to reject two popular theories of nonprofits -- ``for-profits in disguise'' and ``pure altruism'' and lend support for theories of nonprofits as perquisite or output maximizers.

How Many Pears Would a Pear Packer Pack...

We examine labor supply using a unique dataset collected from a large pear-packing factory. Pear packers face both expected and unexpected shocks to their wages, and we use this to evaluate different models of inter-temporal labor supply. We find strong evidence for reference-dependent preferences, but only mixed support for models of rational-expectations-based targets.

In this work, we study a particular policy problem—California’s efforts to ensure the earthquake safety of its hospital infrastructure that is subject to an ex post enforcement problem. As suggested by a wrongful death case after the 2003 San Simeon earthquake (discussed in more detail later), older hospital buildings were, at least in principle, subject to the threat of ex post litigation. The ineffectiveness of ex post litigation in this context is highlighted, however, by the fact that many hospitals responded legislation by deferring new construction in favor of extending the life span of their existing buildings. As such, the 1973 law had the perverse effect of increasing the susceptibility of California’s hospitals to seismic damage. This failure had real consequences in 1994 when twenty- three hospitals had to suspend some or all services due to structural damage sustained during the Northridge earthquake.

We proceed by first describing the evolution of California’s approach to ensuring the seismic safety of its hospital infrastructure, from an implicit reliance on ex post litigation to the current very detailed regulatory approach. We trace out some unintended consequences of the current regulation for the availability of hospital services. We provide a back- of- the- envelope estimate of the trade- off the state has made to ensure hospital operations after a seismic event. Finally, we discuss a market- based trading system for earthquake- safe bed obligations that could achieve the same functional goal as the mandate—to ensure that hospitals can sustain and, most importantly, remain operational following a major seismic event—but at a lower cost in terms of money, time, and the long- term availability of services. This approach could be adapted to other mandates that take a one-size-fits-all approach to compliance such as the uniform energy efficiency requirements for new building construction included as part of the American Clean Energy and Security Act of 2009.

Categorical Conseration

A growing body of evidence documents individual behavior that is difficult to reconcile with standard models of rational choice, and firm behavior difficult to reconcile with rational markets. In this paper I present a boundedly rational model of choice that reconciles several behavioral anomalies, and provides micro-foundational support for some puzzling empirical regularities in firm behavior. If the evaluation of an alternative is costly, individuals may find it inefficient to compare all available alternatives. Instead, when faced with an unfeasibly large choice set, some individuals may compare groups of alternatives (i.e. categories) to reduce the choice set into a more manageable set of relevant alternatives. I call these individuals categorical considerers and develop a model in which these decision makers sequentially apply a single well-behaved preference relation at different levels of aggregation. I explore the implications of this model for both individual behavior and equilibrium firm behavior in market settings. Under certain conditions, the existence of categorical considerers in a market causes firms to utilize strategies different from what would be optimal in a market of fully rational consumers. This simple model generates predictions about behavior consistent with several new field experiments, and offers possible explanations for excess spatial product differentiation, brand name premiums, and product branding